Entitlement Reform in Wall Street Journal

Federal Entitlement Reform....... You sleepy yet?

Not a sexy topic, but one that should scare any American. Entitlements -- those programs which are gauranteed to Americans year after year such as Social Security, Medicaid, and Medicare -- are growing at a rate that is unsustainable for the next generation and the ones after that. Think about these three sobering realities that adults in the year 2050 (not that far away) will face if these programs are left as they are today:

1. Raising tax rates by 57%, (in today's dollars, each American family would need to pay $11,000 per year more in taxes), or
2. Spending Federal money on nothing (no education, no defense, etc.) except for Social Security, Medicaid, and Medicare, or
3. Increasing our federal debt, which is already too high, by about 13 times (this is already adjusted for inflation -- it will be way, way more than 13 times when you just look at the raw dollars)

Wow. I'm usually not a "sky is falling" type of person, but this is big. Nations don't survive this type of crisis. The demise of the Soviet Union was caused by... can you guess?.... spending too much of their GDP on one government expenditure. In their case, it was defense. In our case, it could be these entitlements.

The reason I'm writing all this is because it is my long way of telling you that Rep. Paul Ryan of Wisconsin had a great OpEd in the Wall Street Journal on things we can do to fix this massive problem. Subscription is required to read it online, or you can find a copy of the 5/21/08 WSJ. I encourage anyone to read it. Kudos to Congressman Ryan for calling out the elephant in the room. Now let's start talking about how to fix it.

Three Properties For Which I'd Like to Choose Tenants

As I make my way through the South Lake Minnetonka area, I invariably see commercial properties turning over or being developed. It is hard not to wonder what types of businesses would do well in those vacant storefronts. So here, with absolutely no bearing on what will actually happen to these buildings, is what I would do if I could snap my fingers and fill the storefronts:


1. Excelsior, corner of 3rd and Water (old Color Center building): The shop that moved in for just a few months has relocated across the street, leaving this building empty. I'm not sure what drove this decision, but I have an idea for how to refill the building. This location would make the perfect D'Amico and Sons Deli. I love that I can get fine Italian, Sushi, and an Irish entree with a pint in Excelsior, but I need more takeout options. 318 does a splendid job, but I find myself picking up food in Chan or Minnetonka when I'm in the mood for something different. A D'Amico in town would mean I bring more of that business back to Excelsior. (Author's note: I would also be able to snap my fingers and solve the parking ratio issue that could make this type of occupancy difficult under current rules).


2. Shorewood, strip mall along Hwy 7 near Holiday (former Minnetonka Outdoors): The operators of the well-run fishing store that used to inhabit this location were excellent. I just think that the location wasn't right for fishermen. If you think about it, there was no boat launch onto Minnetonka in the area, so they had to mainly rely on locals for all the business. They were onto something, however: Sports. Just change the focus from fishing to more of a sporting goods store -- running shoes, soccer gear, workout gear, hockey and baseball equipment, and you'd have good traffic. Right now, to buy a pair of non-Target workout shorts, I have to go to a mall. I'd rather keep that business in Shorewood. With the number of school-aged atheletes in the immediate area, and how active the area people tend to be, I think it would do well.



3. Deephaven, that brand new building going up at Chowen's Corner (the hard curve on Minnetonka Blvd): This one seems like a no-brainer -- the highly successful and always packed Beanhaven Cafe, in need of about 30 more seats, could be relocated just down the street and use the first floor of this new building. It would be the same neighborhood, so nobody would be put off when they realized their favorite breakfast joint had moved, because it would have only moved 1/2 a block. Some would argue that the smallish nature of the current cafe adds to its ambience. I say it would still have great, independent, single-proprieter ambience if it had 30 more seats.

John Berns not seeking reelection

Rep. John Berns, the legislator representing House District 33b, announced earlier this week that he will not seek reelection. He cites personal, family, and financial reasons as the driver behind his decision. I first saw the news in the Sun Sailor.

Rep. Berns has represented the district well, in a moderately conservative fashion that suits the district's profile. It is understandable that the office's impact on income and the demanding peak period of legislative work doesn't capture a young family man like Berns. Berns served his district, did a good job for his term, and will now give someone else their chance at public service.

Thank you to Rep. Berns for his service, and I'm sure we'll provide plenty of coverage of this November candidate field as it becomes a bit clearer.

Washington Post ranks Pawlenty as #1 VP contender

The Washington Post has ranked Tim Pawlenty as the top contender to be John McCain's VP nominee. I'd post a link, but subscription is required. Other names on the list include Florida Governor Charlie Crist and South Dakota Senator John Thune. There is a theme emerging -- youthfulness. It is clear that the VP nominee will need to balance McCain's more, shall we say "seasoned" quality.

On the Democratic side, the top ranking for the VP slot goes to Governor Kathleen Sebelius of Kansas. In 3rd place is Hillary Clinton, so it is assumed that Obama is the nominee.

At the state level, one has to wonder if Pawlenty on the ticket would give coattails to local and congressional Republican candidates.

Is it still called property tax if it is tied to income?

As we go through the month of May, we'll see several prominent bills discussed at the state capitol. One such bill is the effort to change the way property taxes are paid. http://www.twincities.com/ci_9165066

The bill, authored by Ann Lenczewski, a DFLer from Bloomington, would shift property tax relief to those earning under $200,000 and whose property taxes account for more than 2% of their income. Who pays for it? Those whose property taxes are less than 2% of their income, and those whose households earn more than $200,000.

I don't like this bill on two levels: First, property taxes, along with sales taxes, are one of the last taxes tied to a discretionary purchase. You buy a $500,000 house, you probably will pay a few thousand dollars a year in property taxes. Likewise, if you are frugal and buy a $150,000 condo, you will have a lower tax bill. Your choice.

This bill would create a disincentive to live below your means and save money. If you earn a healthy income but choose to live in a modest home, you would see your property taxes increase to help cover the taxes of the person who was not as frugal on the housing front. It essentially eliminates anyting resembling a property tax and adds to an already considerable income tax here in Minnesota.

The second reason I don't like this bill is because it includes a cap on the amount of increase for local taxes as a component of the property tax. Under the bill, local taxes could only increase by 3% or the rate of inflation. In fairness to Lenczewski, this was an addition suggested by Governor Pawlenty. As I've written before, I don't like the state telling the cities what to do. If Shorewood decides to build a state-of-the-art community center that will require property taxes to increase by 6% a year, they should be able to. (for the record, I would disagree with this type of spending, but I think the council should be the ones to veto the idea, not a state-set cap). I'm not a tax-and-spend liberal, but I also believe in local control of fiscal matters.

I don't like this bill. We already have a plenty progressive tax code in Minnesota, and the property taxes you pay are one of the last taxes determined by something other than how much you earn. I'd like to see property taxes continue to be tied to property values and local levies, not earnings.

Shorewood gets PR on Garage Logic

Garage Logic, the Joe Soucheray drive-time show on AM-1500, spent a fair amount of time on Monday's show discussing the latest Shorewood city newsletter. Soucheray was skeptical that a city government needed to offer as many services as it does. He questioned if things like a city clean-up day, youth activities, or prairie grass planting was really something that a city government needed to offer.

He made the point that he was using Shorewood as an example, but many if not most state cities have become primary providers of many services which he clearly views as "fringe". It is worth a listen. Click on the Monday, May 5, 3pm-4pm hour to tune in.

http://www.am1500.com/podcasts/index.shtml#garage

(editorial) Pavilion Vote: Not an Indication of Anti-Development

Excelsior has, rightly or wrongly, long had a reputation of being a difficult place to redevelop. Land use restrictions, historical preservation, and building codes have been cited as reasons why developers don't see Excelsior as a profitable place to invest.

With the recent rejection of the lakefront Pavilion, I can envision that outside developers will add it to their list of examples of why Excelsior is not developer-friendly. I can hear it now: "Someone was willing to build a lakefront pavilion and a parking ramp for the city at no cost, but the residents didn't want change."

Wrong.

In dealings with residents of Excelsior, I find that people are very open to renewal. Be it a run-down home or a burned-down hardware store, there is more than enough support to redevelop the city in a tasteful and gradual manner. I can name several sites, probably a dozen, in the city limits of Excelsior where there would be near-unanimous support for redevelopment of an underutilized lot. The problem is that the lakefront isn't one of them.

This was a nice idea for the wrong site. Excelsior's identity is that of a lakefront village. If you take the lakefront or the village aspect away, residents will speak up. The pavilion proposal was akin to wanting to develop a building in Washington DC -- at face value, sounds great. But then we learn that the desired location is on the Mall, in between the Lincoln Memorial and the Washington Monument. Out of the question.

That example might be a bit extreme, but scale it down several times and you begin to understand the impact that lakefront development has on Excelsior's identity.

I hope more ideas come along that would make use of underutilized Excelsior lots, and do so with private developers being creative on how to enhance the city. They may not all be approved, but the ones that are will become part of Excelsior's identity for future decades and will be met with enthusiastic support from residents.

Pavilion Proposal Rejected

The proposal for a pavilion on the Excelsior lakefront has been rejected by the city council. This is following a very lively public debate over the past four months, and examination by several Excelsior commissions.

A full story can be found here: http://www.mnsun.com/articles/2008/05/02/news/ex01cncl.txt

Look for an editorial to come soon, but for now we'll keep it to just the facts.